Construction Network

CONSTRUCTION KNOWLEDGE BLOG

July 11, 2012

Low price, low price, low price. When you talk about commercial construction sales, that’s what you hear…and probably say. In the generally business to business sales world of commercial construction, I often hear folks saying, “Nothing matters these days except low price.” But it’s just not true.

Even in the worst case scenario of public works construction, where the contracting entity mostly does have to award based on low price, other factors still matter. Firms that do a terrible job get put on no bid lists. Also each firm bidding must be well enough run to convince their bonding agency that they are financially and technically viable to complete the project.

My brother owns an electrical contracting firm in Montana and was recently awarded a good sized public project when he was the third to low bid. The agency threw out the first bid on a technicality. Then they checked references on the second and third bidders and decided they would receive much better value from my brother’s firm. So they had the gumption to award that way. Admittedly this isn’t the norm, but even in public works reputation and experience matter.

I propose that on most private work, reputation, experience and personality matter substantially. When someone says, “Only price matters,” I hear “I haven’t done the work to differentiate myself.”

For subcontractors, you need to build strong relationships with job supers, PMs and Estimators of the General Contracting firms you want to work with. When the purchaser discusses who to use with his or her team, the feedback matters. Yes, the prices have to be close, but the GC generally awards to the firm they like and want to work with.

GCs that don’t follow this pattern and consistently award to terrible low cost subs are the GCs you don’t want to work for anyway. You will certainly lose money on their projects because there will be no efficiency or Esprit de Corps.

Purchasers also tend to award to people they personally like. Again, the numbers have to work, but we all tend to work harder to make the numbers work for a buddy than for an acquaintance.

So what’s the take away if your looking for commercial construction work? Make sure the work you do is excellent. Build strong relationships (which takes effort and attention) with the job super and PM. Build a strong relationship with the purchaser.

Here’s a bad example for an object lesson. A ductwork installation sub on a project we’re building acts rammy. While our job super can’t prove it, he’s sure they have damaged many walls (which we pay to repair) and lie about it. I’ll remember that firm’s name and make sure they never work on our jobs again. It’s a simple rule for me: I like people that tell the truth and don’t like liars.